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Archstone Makes Big Bet on Manhattan Apartments

Before you hop the train to the beach for a weekend of gluttony, don't you think you should swallow a little real-estate investment trust (REIT) news. C'mon, we'll do it together. A special Curbed correspondent crunches the numbers on Archstone-Smith's purchase this week of NYC apartment buildings, the Aston and the Foundry (image right via Joel Sanders):

What's interesting is the valuations... They're phenomenal... 300-700% higher than average REIT valuations (generally around $130k per unit to $145k per unit if you divide MarketCap by # of apts):

$195M / 266 = $733k per unit
$87.6M / 222 = $394k per unit

Just compare these transactions to the $1.1B Archstone paid Oakwood last week to buy 8,228 apartments units nationwide:

$1.1B / 8228 = $133K Which is about par for other nationwide apartment portfolio valuations .

Either Archstone has access to really really cheap capital, they have some way to generate more cash, or they are making a big bet on apartments, valuations be damned.Now that wasn't so bad was it? See REITs can be fun.
· Archstone-Smith buys Manhattan apartment highrises [Reuters]